The Owners-Strata Plan No 53865 v JPG Investments Pty Ltd

NCAT Appeal Panel|2024-04-30

REASONS FOR DECISION

This is a costs application from a decision of the Appeal Panel dated 30 January 2024 (The Owners-Strata Plan No 53865 v JPG Investments Pty Ltd [2024] NSWCATAP 12 - 'the substantive decision').
This decision is to be read in conjunction with the substantive decision.
In this decision, The Owners-Strata Plan No 53865 is referred to as 'the owners corporation'; and JPG Investments Pty Ltd and Conrad Corporation Pty Ltd are referred to conjunctively as 'the Lot owners'.
In the substantive decision, the Appeal Panel refused leave to appeal and otherwise dismissed the appeal of the owners corporation from a decision of the Tribunal that the owners corporation consent to the lodging of a development application by the Lot owners with the local Council under s 232(6) of the Strata Schemes Management Act 2015 (NSW) (SSM Act).
The Lot owners seek a costs order in their favour.
In the substantive decision, the Appeal Panel made procedural directions to deal with any costs application.
Both parties have file and served costs submissions in accordance with the timetable set in the directions.
We are satisfied that it is appropriate to dispense with an oral hearing on the issue of costs, and determine costs 'on the papers' pursuant to s 50(2) of the NCAT Act. The parties were given an opportunity to advise whether they were of the view the costs issue could be determined on the papers but neither party did so. By the same token, neither party sought an oral hearing on the issue of costs.
We are satisfied written costs submissions afford both parties a reasonable opportunity to be heard on the issue of costs, and that an oral hearing will not assist us to determine the costs dispute. Further, an oral hearing on the issue of costs will only put both parties to further unnecessary expense.

Applicable Costs Principles

Section 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) states: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following - (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36(3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may - (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section - costs includes - (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
However, rr 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) are, if applicable, exceptions to s 60(1)-(3) of the NCAT Act.
Those provisions are as follows: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if - (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000. 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of - (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
The operation of r 38 and r 38A of the NCAT Rules is a two-step process. Firstly, the amount claimed or in dispute in the proceedings under appeal must have exceeded $30,000. Secondly, the amount claimed or in dispute in the appeal itself must have exceeded $30,000. Both steps must be satisfied for the appeal costs determination not to involve consideration of whether "special circumstances" are established under ss 60(2) of the NCAT Act (Promina Design & Construction Pty Ltd v The Owners-Strata Plan No 97449 (No 4) [2023] NSWCATAP 338 at [10]-[18] and the authorities cited therein).
What is the amount "claimed or in dispute" has been considered by the Appeal Panel in Allen v TriCare (Hastings) Pty Ltd [2017] NSWCATAP 25; The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite); and Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361.
In this matter, the proceedings at first instance only involved the Lot owners seeking an order under s 232(6) of the SSM Act that the owners corporation consent to the lodging of a development application. No monetary amount was sought. No remedy was sought that monies not be paid. The relief sought did not depend on there being a finding that a specific amount of money was owed. There was no order sought that work be performed, nor did the Tribunal have the power to make a specific amount of money, even if not asked for. Accordingly, r 38 of the NCAT Act did not apply to the proceedings at first instance (Malachite at [3]-[5]).
The principles applicable to this costs application involve ss 60(1)-(3) of the NCAT Act.
When the provisions of ss 60(1)-(3) of the NCAT Act apply, the Tribunal must be satisfied both: (a) there are "special circumstances" and (b) those "special circumstances" are sufficient to warrant the exercise of discretion to depart from the usual position under s 60(1) that a party bears its own costs. It is a two-step test.
The party seeking the costs order in its favour bears the onus of establishing both steps.
Applicable principles are discussed in The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [6]-[15]) as follows (footnotes omitted): "The general rule set out in s 60(1) was: "… designed to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as is practicable: Choi v University of Technology Sydney [2020] NSWCATAP 18 at [41]. [1] In Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42 the Appeal Panel said, at [8], that the discretion to award costs had to be exercised judicially: "...having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. (See eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (no 2) [2016] NSWCATAP 168 at [16].)" Section 60(2) says that the Appeal Panel may award costs to a party "only if" satisfied there are special circumstances warranting an award of costs. Section 60(3) sets out a non-exclusionary list of factors to which an Appeal Panel may have regard in determining whether special circumstances warranting an award of costs exist. "Special circumstances" are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] (Santow J); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107]. However, it does not follow that a costs order should be made simply because one or more of the factors in s 60(3) are made out. Even if satisfied that there are special circumstances, the Appeal Panel must further be satisfied that they are circumstances "warranting an award of costs" - Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21]; Youssef at [108]. The exercise of the discretion requires the Tribunal "to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]; Obieta v Australian College of Professionals Pty Ltd (2014) NSWCATAP 38 at [81]; Khalafv Commissioner of Police [2019] NSWCATOD 178 at [29]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35]. He who asserts must prove, and so the party seeking the costs order bears the onus of proving that special circumstances exist - Styles v Wollondilly Shire Council [2017] NSWCATAP 108 at [5] under the heading "Costs". Whether special circumstances exist is a question of fact and each case must be assessed according to its circumstances: Wynne Avenue Property Ltd v MJHQ Pty Ltd (No 2) [2019] NSWCATAP 68 at [57]; The Owners - Strata Plan 20211 v Rosenthal [2019J NSWCATAP 49 at [15]."
Further, in Grasso v The Owners-Strata Plan No 52399 [2022] NSWCATAP 91 (Grasso) at [12] the Appeal Panel stated: "1. An application for costs can only succeed before the Tribunal if it can be shown that 'the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional.': Santow JA in Cripps v G & M Mawson [2006] NSWCA 84 at [60] in relation to s 88 (1) of the Administrative Decisions Tribunal Act 1997, which, by analogy, is a useful statement applicable in this Tribunal; 2. 'An assessment whether circumstances are "special" involves the exercise of a value judgement carried out by way of comparison between what is not "special", and what is special.': See Alexander James Pty Ltd v Pozetu Pty Ltd (No.2) [2016] NSWCATAP 75 at [14]; 3. the nature and complexity of the appeal proceedings is the relevant consideration; not the nature and complexity of the proceedings at first instance: see Sahade v Owners SP No 62022 [2015] NSWATAP 225 at [38]; 4. the power to award costs is a discretionary power vested in the decision maker: see Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 62 at 65; [1997] HCA 6; 5. the exercise the discretion requires a tribunal 'to weigh whether those circumstances are sufficient to amount to "special circumstances" that justify departing from the general rule that each party bear its own costs': see The Owners - Strata Plan No 63731 v B&G Trading Pty Ltd (No2) [2020] NSWCATAP 273 at [13]; 6. an order for costs is intended to compensate the successful party: it is not intended to be punitive in nature: Oshlak v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; Hamod v State of New South Wales (2002) 188 ALR 659; [2002] FCA 424; [2002] FCAFC 97; and 7. the discretion to award costs is to be exercised judicially: Nguyen v Perpetual Trustee Co Ltd [2015] NSWCATAP 264 at [94]."

Costs Submissions of the Parties

Both parties submissions address the issue of whether there are, or are not, "special circumstances."
The Lot owners' submissions are summarised as follows: 1. The owners corporation's appeal was manifestly weak to the extent it can be said it had no tenable basis of law. 2. The owners corporation pursued excessive appeal grounds. 3. The manner in which the owners corporation conducted the appeal caused unnecessary expense and delay to the Lot owners. 4. The owners corporation had never sought to negotiate a resolution with the Lot owners; had unreasonably refused to consent to the lodging of the development application; and had pursued a meritless appeal.
The owners corporation's submissions are summarised as follows: 1. The grounds of appeal were not excessive. 2. The grounds of appeal were arguable. They were not weak, untenable, or misconceived. 3. The owners corporation had not acted unreasonably such that it caused the Lot owners to incur unnecessary expense in the appeal. 4. No special circumstances sufficient to make a costs order are established.

Did the owners corporation conduct the proceedings in a way that unnecessarily disadvantaged the Lot owners?

We are not satisfied the owners corporation conducted the appeal proceedings in a way that unnecessarily disadvantaged the Lot owners.
The appeal proceedings were conducted in a procedurally orthodox way, with a Call Over and appeal hearing. The was an application for a stay, in which the owners corporation was the successful party, but costs were ordered to be costs in the cause of the appeal (The Owners - Strata Plan No 61618 v JPG Investment Holdings Pty Ltd [2023] NSWCATAP 167). There were no adjournments caused by the conduct of the owners corporation.
We are not satisfied the owners corporation raised unnecessarily prolix or wide grounds of appeal (see substantive decision at [58]-[68]).
The Lot owners point to the large amount of documents that were referred to in the appeal. The owners corporation responds by asserting that the vast majority of that documentary material was before the Tribunal at first instance, and it was necessary to refer to those documents in the appeal.
We are not satisfied that unnecessary documents were sought to be relied upon by the owners corporation in the appeal.

Was the owners corporation responsible for prolonging unreasonably the time taken to complete the proceedings?

We are not satisfied the owners corporation was responsible for prolonging unreasonably the time taken to complete the proceedings. Although there were grounds of appeal that were weaker than other grounds, we are not satisfied that pursuing the grounds of appeal "prolonged unreasonably" the time taken to complete the appeal.

The relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law.

In some appeals, the poor prospects of success in the appeal are sufficient to be satisfied that there are "special circumstances" and those special circumstances are sufficient to make a costs order in favour of the successful party in the appeal (e.g. Amirbeaggi v NSW Self-Insurance Corporation (No 4) [2024] NSWCATAP 57 at [28]).
Much of the owners corporation's submissions refer to the Lot owners grounds of appeal being manifestly weak or untenable. Unsurprisingly, the Lot owners do not concede this point.
The relative strengths of a parties grounds of appeal and appeal arguments are matters that are "necessarily impressionistic and incapable of fine analysis or detailed explanation" (Roberts v The Owners-Strata Plan No 4393 (No 2) [2023] NSWCATAP 243 at [25]).
The reason for this is obvious, in the context of the legal test of whether "special circumstances" are established such that the Appeal Panel should exercise its discretion to make a costs order in favour of the successful party. The successful party will often submit in a costs application that their victory was a dominant one, and the unsuccessful party had little hope of victory. The unsuccessful party will often submit that the loss was an honourable one, and their arguments narrowly failed. Both types of submissions are often unenlightened.
In the substantive decision, we set out in detail the reasons why the appeal failed. Some grounds and arguments were weaker than others (for example, the arguments based on ss 9 and 37 of the SSM Act-see [109]-[114] of the substantive decision).
However, we are not satisfied that is appropriate to characterise the owners corporation's grounds of appeal and legal arguments as so weak or untenable as to be "unusual" or "out of the ordinary" such as to constitute "special circumstances" under s 60(2) of the NCAT Act.

The nature and complexity of the proceedings

The appeal proceedings had a degree of legal and factual complexity, which led to a lengthy and comprehensive substantive decision. However, many appeals involve legal and factual complexity, including appeals involving the SSM Act. We are not satisfied that the nature and complexity of the appeal proceedings are such as to be "unusual" or "out of the ordinary" such as to constitute "special circumstances" under s 60(2) of the NCAT Act.

Were the appeal proceedings frivolous or vexatious or otherwise misconceived or lacking in substance?

We are not satisfied the appeal proceedings were frivolous, vexatious or otherwise misconceived or lacking in substance such as to constitute "special circumstances" under s 60(2) of the NCAT Act.

Whether a party has refused or failed to comply with the duty imposed by section 36(3)?

Section 36(3) of the NCAT Act states as follows: 36 Guiding principle to be applied to practice and procedure (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it - (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal - (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.
We are not satisfied that the conduct of the owners corporation or the legal practitioners acting for it in the appeal proceedings constitutes a breach of the duty under s 36(3) of the NCAT Act.

Any other relevant matter?

In its costs submissions, the Lot owners raise the conduct of the owners corporation in opposing consent of the development application; opposing the Lot owners in the Tribunal proceedings at first instance; launching an unsuccessful appeal to the Appeal Panel; and not being prepared to resolve the dispute. The Lot owners complain they have been put to considerable delay and expense.
Although some of those matters have potential relevance to a costs application before the Tribunal at first instance, the Appeal Panel is dealing with a costs application in the appeal proceedings. Costs orders are not imposed on a punitive basis. They are also not imposed because of any sympathy to the successful party.
We are not satisfied there are any other relevant matters in the appeal proceedings sufficient to constitute "special circumstances" under s 60(2) of the NCAT Act.

Conclusion

Considered individually and conjunctively, the Lot owners have failed to establish "special circumstances" under s 60(2) of the NCAT Act, having considered the matters in s 60(3) of the NCAT Act. The Lot owners have also failed to establish that, even if there were "special circumstances," they are sufficient for the Appeal Panel to exercise its discretion to depart from s 60(1) of the NCAT Act and make a costs order in favour of the Lot owners.
Finally, it is unnecessary for us to comment upon the provisions of s 90 of the SSM Act and the Appeal Panel decision in The Owners-Strata Plan No 74698 v Jacinta Investments Pty Ltd [2021] NSWCATAP 387, which will be relevant if the owners corporation seeks to impose a levy on the Lot owners for the legal costs incurred by the owners corporation in bringing the unsuccessful appeal. That issue is beyond the scope of this costs decision, and may not arise in the future in any event.

ORDERS 1. An oral hearing on the issue of costs is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 2. The application for costs is dismissed. 3. Each party is to bear its own costs of the appeal.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 April 2024

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Judgment (13 paragraphs)

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Cases Cited (37)

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